Q2 Begins with Higher Expectations

Stocks closed the first quarter without much fanfare and they head into Q2 with a strong seasonal tailwind. The major stock market indices are still not all in gear to the upside, but I expect that to correct itself this quarter with new highs across the board. Semis and discretionary are still very strong and I expect transports and banks to reassert themselves. Junk bonds had a very strong close to the quarter and they will need to continue that run this quarter.

Earnings season begins next week and the comps from this time last year will be very easy to surpass. However, analysts have really increased their expectations so companies need to blow out to the upside or those stocks will suffer.

My theme remains unchanged. The bull market is alive and reasonably healthy. Dow 23,000 is my next target. Weakness should be bought.

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